http://www.gulfkeystone.com/ The firms exploration programme in Algeria is going well and "the shares look good value", say the Investors Chronicle. Your comments please. goal.

Quick please fly me there !.

there'll be a good selection of gnomes to choose from for your garden collection

another interesting one from adv...imho
13-Aug-09
23:04 Gulf Keystone to focus on share placement strategy, unlikely to seek major strategic investor to help monetise assets
Story * Shaikan-1 drilling update expected in two to three weeks, likely to be material to share price, source says
* Based on estimates of USD 5/bl oil, company could eventually trade at multiples of current share price



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Gulf Keystone, the Kurdistan focused, AIM-listed oil and gas company, is expected to continue with its existing share placement strategy and is unlikely to seek a second major investor to fund its Kurdistan drilling programme, it is understood.

Last month the company said ETAMIC, a Middle East based private investment fund, had become its strategic investment partner for Kurdistan, a move that mitigated exploration risk. ETAMIC successfully negotiated the award of two new Production Sharing Contracts (PSCs) and will fund 50% of the contracts' costs, said the company.

GKP will vote at tomorrow's AGM for a new mandate to issue up to 250m new shares, as it looks at ways to monetise its potentially significant resources in Kurdistan. It is understood that going forward the company is eyeing the less dilutive share placement option against further draw downs on its GBP 30m standby equity distribution agreement, which it signed with YA Global Master Fund in May. A total of GBP 2.4m has been drawn down under the SEDA to date. This news service also reported earlier this week that GKP is looking to sell its Algerian assets, likely to French group GdF Suez. GKP's current market cap is GBP 155m.

A source familiar with the company said GKPs current cash position, from a USD 11m share placement to new and existing investors earlier this month, will run out in September 2009.

GKP will provide a second update for its Shaikan-1 well in Kurdistan in around two to three weeks if it reaches its next casing point at 2,500m on schedule, said the same source. This announcement could have a material impact on the companys market value, the source added.

Gulf Keystones shares surged last week to close at 29p after the company said it had discovered potential resources of 400m barrels of oil at a depth of 1,500m in the Shaikan-1 wells Sargelu formation. The company added that a further 1.5bn barrels of oil could be in the wells Alan and Mus formations, which lie in a 250m zone directly underlying the Sargelu discovery, according to GKPs investor presentation in April.

Two sources not involved in the situation estimated that oil in the ground in Kurdistan is worth around USD 5/bl. This figure corroborates with the enterprise value/proven and probable reserves of Norways DNO International, which is producing oil in the Tawke field in the north-west of the Shaikan Block in Kurdistan. More than 90% of the Norwegian-listed E&P companys 250m of proven and probable (2P) reserves are located in the Shaikan basin. DNO International has an enterprise value of NOK 8.7bn (USD 1.4bn).

Under the terms of its license for Shaikan-1, GKP has a 27% stake in any development post back-ins. Based on its published estimates of 400m barrels of oil, GKPs entitlement would then equate to 108m barrels. Using an industry standard oil recovery factor of 40%, Gulf Keystone therefore can expect to have rights over 43m barrels of oil. Multiplied by the USD 5 per barrel figure, this would equate to value of USD 215m (GBP 129m), which was in line with its market value at the end of last week.

According to these calculations, GKP could eventually be valued at more than USD 1bn, if it can firm up the 1.9bn barrels in the ground from the Shaikan-1 well. However, the source familiar and industry sources stressed that GKP had issued early indications of potential resources and that no certainty could be given to the amounts stated.

One of the industry sources said GKP was currently drilling in the secondary zones of the Shaikan-1 well and that it needed to go into the primary zones to establish significant levels of oil. This will take a further two or three months estimated the source, who is not directly involved in the situation.

The industry sources further cautioned that as GKP is a relatively late entrant into the region, the federal government in Baghdad may consider their export contract as illegal. One of the sources said DNO, Addax Petroleum and other companies in the region had signed contracts with the Kurdistan Regional Government before the Iraqi Constitution was made law. This is not the case for GKP, he added. However, the same source said there were indications that the federal government will in six to 12 months time recognize the later entrants contracts with the KRG as legal.

Meanwhile, GKPs statement on 30 July, in which it denied it was in talks with Indian state-owned entities regarding a USD 2.23bn bid, came after Indias main news agency PTI first ran the story.

by Ed Vinales and Oliver Adelman

Nice article, thanks.

GKP has currently 478.49m shares in issue. 250m more seems one hell of a dilution, depending on the issue price. Needs careful watching, imo.

Take a look at SEY, that is a dilution, at least GKP have discovered something; At a guess it should be around 30p or so, I doubt it will be anything less, the finance people should be fighting over getting a foot in the door here..

Despite my post (325) I have sold for in excess 200% profit. Good luck all remaining holders.
2517

Now what are you going to do with all that loot George?

I hope to get back in lower down on GKP, or there will be several opportunities to buy blue chip co's over the next couple of months I'm sure. Or the missus may invest some in the retail sector ha!ha!
2517

Unless it's dry at the bottom you probably won't be able to...though a few pennies pulback always happens......I would retain some.. 2517george...

HC- If they get the big lump sum of cash from the Algerian asset then they will be flush for the next years imo. Will massively help fund Kurdistan development (the intention).
Current cash looks enough for this back to back drill programme. When GKP was bid for (takeover) they offered 208m for (74P) in 2007 for Algeria (RAK Petroleum).

So $150m is getting them (the bidder) a good deal if it is confirmed.
Suggests three parties are interested so who knows.

From post #330 lizard:
"GKP will vote at tomorrow's AGM for a new mandate to issue up to 250m new shares, as it looks at ways to monetise its potentially significant resources in Kurdistan."
This looks to be in addition to any sale of assets.

Who knows but if Algeria is sold for that then can't see the immediate point of more share issues.

They only put out an rns a month ago confirming intention to sell Algeria (as it looks at ways.......Kurdistan).

Would GKP let go of their position in Algeria if the prospects in Iraq were not already known.

depends how big a gambler the board is .... i think iraq is quite a long way from a "happy ending", though kurdistan is preferable to further south

I reckon the sp could jump into the lower forties early on monday....this is way ahead of drilling results....

why?

Talk of 3 interested buyers for the Algerian assets--min $150 maybe more as they turned down a bid of 74p some time ago when they only had Algerian prospects---possible developments from the IOC interest in a T/o for however many billions it was---traders in ahead of the september target depth. General pi excitement at being in at the possible birth of a giant oil co if it's allowed to survive****take your pick Cynic!! I'm in and holding at least until Christmas!

i'm in and happy enough ..... ditto PCI and GPX and CFM (as a bit more of a greed-gamble!) ..... the reast of my portfolio is rather more based on "proper" companies

Are you in PXS yet? not one to miss IMO as it's starting to move up after a long wait. read up on the Sirco website what it does and on the Provexis site their other irons in the fire. 2 year trial on a treatment for crohns disease etc.